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SPEECH/06/439












Neelie Kroes

European Commissioner for Competition Policy




Competition policy in a Lisbon context – the State of Play























German Bundestag - Europaausschuss
Berlin, 6th July 2006

Ladies and Gentlemen,

Thank you for inviting me to join you today. The eyes of the world are on competition in Germany this week – although a different sort of competition to the one I think you invited me to talk about. Congratulations on hosting such a successful World Cup. And despite the result on Tuesday, I think it is clear the German team has played with enthusiasm, skill and in true sporting spirit.

As I said at the start of my mandate, the European Commissioner for Competition acts as the referee to ensure a fair level playing field in our Single Market. And there, as in football, it is only fun if everyone plays by the rules.

I for one was delighted to see all-European semi-finals - we in Europe clearly have the top-performing world-class football teams, perhaps not least because they face stiff competition amongst themselves on a regular basis in European tournaments. We should be inspired by this - and make our European economies just as competitive as our football teams!

We re-launched the ‘Lisbon’ agenda in 2004, because we still have a long way to go. Compared to the world’s emerging economies, productivity is growing slowly, unemployment is high, and we lag behind in innovation.

The aim of the renewed Lisbon agenda is to ensure that Europe makes the necessary transition. Some difficult changes are needed if we are to take advantage of the real ‘opportunity’ that globalisation presents – for I’m convinced it can be a win-win game. This calls for a long-term effort that can only be sustained with strong public ownership, which is where national parliaments have an essential role to play!

My job is to ensure that the competition rules play their part in implementing this agenda. An open, competitive Single Market is Europe’s biggest asset, unique in the world. Competition policy and effective enforcement will secure a level playing field – so all operators in the Single Market compete and win on merit alone. This is what generates investment, efficiency and innovation.

And this is why I set three priorities back in 2004:

  • First, a comprehensive reform of the State Aid rules
  • Second, effective enforcement and modernisation of the anti-trust and merger rules,
  • Third, a pro-active competition policy to complement our competition rules.

We have been busy since then, and have made very good progress. I would like to highlight a few key developments which should make the most direct contribution to our joint Lisbon agenda.

State aid

Let me start with state aid reform. Our 2005 State Aid Action Plan set a roadmap for comprehensive reform of our rules. State aid can help boost competitiveness, by targeting those areas where the market alone does not deliver. But state resources are precious - and if they are not used properly, they can severely distort competition.

So the guiding principles of this reform are “less” and “better targeted” aid. We are overhauling all our rules in order to firmly ground them in rigorous economic analysis and to improve the speed, transparency and predictability of their application.

From the start, political consensus for the reforms was very important for me. The Commission can only design the best possible framework. The real test is whether Member States then use these rules effectively. National parliaments are essential here – by scrutinising aid measures and budget commitments, you make sure that subsidies genuinely serve the long-term interests of your citizens and the sustainable competitiveness of your businesses.

So, where have we got to with Reform?

We began in 2005 with new rules on Services of General Economic Interest and Regional Aid. And we are now working hard on a whole package of ‘Lisbon-aid’, which we hope to deliver by the end of the year.

‘Innovation’ is crucial for the Lisbon agenda, but in general Europe seriously under-performs here. I am pleased that Germany’s National Reform Programme contains ambitious targets for Research & Development and Innovation. . Our new framework on state aid for R&D&I should help you achieve these goals – whilst recognising that subsidies are not the only answer, and that there are many other things that should be done, in particular in relation to structural reforms.

We propose increasing the scope for compatible aid – including innovative start-ups and innovation clusters. We have proposed new rules on risk capital aid, increasing the ‘safe-harbour’ threshold by 50%. And we have proposed a new de minimis block exemption, to double the ceiling for aid which does not have to be notified. I hope that all these rules will be adopted by the end of the year – a serious contribution to Lisbon indeed.

Antitrust and mergers

State aid reform is my number one priority, but I’ve not forgotten the need for effective anti-trust and merger control.

Anti-trust

In anti-trust, our Green Paper on damages actions started an important debate on how consumers and businesses who suffer from anti-competitive behaviour can claim damages. Our aim is more effective compensation, combined with a stronger competition culture to promote compliance!

The German contribution to this debate was enormously valuable - not only from the Federal Government and the Bundeskartellamt, but also from German industry, consumers, academia and the legal profession. Germany has a lot of sound advice. Your experience of updating national rules to better accommodate private actions for damages – and the model of the Seventh GWB – sets an excellent example.

We are currently studying all contributions received. I have a completely open mind about next steps, and we will take the time needed. One thing is clear: I will only suggest action at Community level if this will add real value.

Mergers

I am turning now to the recent increase in the number of cross-border mergers. For me, this shows that the Single Market is a reality, that it is working and that our businesses are taking advantage of it! Of course, there is a lot more to be done to strengthen and deepen our Single Market – but the business world has obviously understood that it is a great asset. Sometimes I have the feeling that it is rather some politicians who have yet to embrace this reality.

I don’t mind telling you that I’m all for global champions, based in Europe, who will be able to compete on a global scale. But when national authorities seem to interfere to hinder cross-border restructuring or promote domestic mergers, I am naturally concerned. You all know which cases I have in mind! They are few and far between – but we must be vigilant. European merger control rules apply to everyone alike – big and small, whatever the nationality. The Commission will continue to act decisively and impartially, both under internal market provisions and under the Merger Regulation.

Sector inquiries

You will recall that my third ‘objective’ is a proactive competition policy, to promote a competition culture.

Last year we launched major sector inquiries in the energy and financial services markets, both key areas for the Lisbon agenda and for Europe’s competitiveness.

Our inquiries are looking at the barriers to free competition in these markets and ways to get rid of them. The preliminary report on the energy sector inquiry was published in February. Among the shortcomings in the electricity and gas markets, we found a lack of transparency and little integration between national markets. We have already initiated a number of individual anti-trust investigations where anti-competitive behaviour may contribute to these problems.

We will continue to act decisively using our enforcement tools. And when the final report is published early next year, the Commission will consider whether changes to the regulatory framework are also needed in order to give the needed push towards secure and affordable energy supplies.

In financial services, the preliminary report on payment cards also identified widespread market barriers - high payment card fees result from a lack of competition, and have a direct impact on every European consumer! We will be publishing the preliminary report into core retail banking products next week. I expect it will show we need to work further to capitalise on the Single Euro Payments Area to deliver lower prices for businesses and consumers.

Better regulation

Finally, this Commission as a whole has really focussed on better regulation”. The Commission’s impact assessment process now includes ‘competition screening’, to ensure that all proposed EU legislation is checked for its potential impact on competitiveness and markets.

I am pleased to see that Germany’s National Reform Programme commits you to systematic impact assessments and reducing administrative costs for enterprises. Your intention to introduce a web-based ‘one stop-shop’ – I understand that you call it Starthothek – will be an important step in improving the business environment.

Conclusion

The Lisbon agenda commits Europe to a set of common goals. The Commission will do its homework. I will ensure that EC competition rules play their role.

But we need Member States’ commitment too. And by that I do not just mean governments – I mean parliaments just as well. It is through you that we can secure the necessary public ownership and consensus. Let us join forces to make sure our European economies are as successful as our football teams!

Ladies and gentlemen, thank you for listening so carefully. I look forward to your questions.


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